Critics of the Keynesian view argue that increases in government spending financed by borrowing will hamper the recovery from a recession and slow long term growth because
a. more spending and debt will lead to higher future taxes to cover the cost of government and the interest on the debt.
b. government spending is directed by political forces, rather than efficient cost-revenue comparisons.
c. more political spending will lead to more wasteful rent-seeking activities and less production of goods and services that people value.
d. All of the above are true.
D
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The demand curve for labor will shift whenever
A) the demand for the final product changes. B) the wage rate changes. C) the supply curve of labor shifts. D) the marginal factor cost changes.
The consumption function has a slope less than one because:
a. as disposable income increases, the real rate of interest will decline. b. saving and consumption are equal at all levels of income. c. as disposable income increases, consumption expenditures increase by an amount less than the increase in income. d. as disposable income increases, consumption expenditures increase by an amount greater than the increase in income.
What happens when there is a sudden increment or decline in the supply of a specific product which affects equilibrium?
a. Capital flight b. Economic equilibrium c. Elasticity of supply d. Supply shock
If a natural disaster were to cause a negative long-run supply shock to the economy, once the economy adjusts, the new equilibrium will be at a:
A. higher price level and lower level of output. B. lower price level and lower level of output. C. higher price level and higher level of output. D. lower price level and higher level of output.